Shocked that companies and mutual funds would invest OPM (Other People's Money) in high-risk investments, the Shocked Investor was originally on a mission to find out if our money ended up in these dubious instruments. This blog now also discusses other financial topics, such as straddles, options, gold, natural gas, agri/food stocks, and the collapse of the US Dollar.

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Sunday, August 26, 2007

Here are the annual inflation rates since 1929, measured from July to July. Also, the equivalent multiplication factor is shown. For example, something that cost $1 in 1929, would cost $12 today, inflation-adjusted.

Annual inflation in % (July base)

Multiplication factor since 1929

Since 1929 using annual average rate

2007

2.36

12.0

11.829

2006

4.15

11.8

11.829

2005

3.17

11.3

11.457

2004

2.99

10.9

11.082

2003

2.11

10.6

10.792

2002

1.46

10.4

10.553

2001

2.72

10.3

10.388

2000

3.66

10.0

10.102

1999

2.14

9.6

9.772

1998

1.68

9.4

9.562

1997

2.23

9.3

9.416

1996

2.95

9.1

9.201

1995

2.76

8.8

8.939

1994

2.77

8.6

8.695

1993

2.78

8.3

8.473

1992

3.16

8.1

8.230

1991

4.45

7.9

7.988

1990

4.82

7.5

7.662

1989

4.98

7.2

7.270

1988

4.13

6.8

6.935

1987

3.93

6.6

6.663

1986

1.58

6.3

6.428

1985

3.55

6.2

6.308

1984

4.20

6.0

6.091

1983

2.46

5.8

5.840

1982

6.44

5.6

5.658

1981

10.76

5.3

5.330

1980

13.13

4.8

4.830

1979

11.26

4.2

4.252

1978

7.70

3.8

3.823

1977

6.83

3.5

3.553

1976

5.35

3.3

3.336

1975

9.72

3.1

3.155

1974

11.51

2.9

2.889

1973

5.73

2.6

2.602

1972

2.95

2.4

2.451

1971

4.36

2.4

2.373

1970

5.98

2.3

2.275

1969

5.44

2.1

2.150

1968

4.49

2.0

2.039

1967

2.77

1.9

1.955

1966

2.85

1.9

1.902

1965

1.61

1.8

1.847

1964

1.30

1.8

1.818

1963

1.32

1.8

1.795

1962

1.00

1.8

1.773

1961

1.35

1.7

1.752

1960

1.37

1.7

1.733

1959

0.69

1.7

1.708

1958

2.47

1.7

1.691

1957

3.28

1.6

1.646

1956

2.24

1.6

1.593

1955

-0.37

1.5

1.569

1954

0.37

1.6

1.574

1953

0.37

1.5

1.569

1952

3.09

1.5

1.556

1951

7.47

1.5

1.521

1950

1.69

1.4

1.410

1949

-2.87

1.4

1.395

1948

9.91

1.4

1.408

1947

12.12

1.3

1.307

1946

9.39

1.1

1.140

1945

2.26

1.0

1.051

1944

1.72

1.0

1.028

1943

6.10

1.0

1.011

1942

11.56

0.9

0.954

1941

5.00

0.8

0.860

1940

1.45

0.8

0.818

1939

-2.13

0.8

0.812

1938

-2.76

0.8

0.823

1937

4.32

0.8

0.840

1936

1.46

0.8

0.809

1935

2.24

0.8

0.801

1934

2.29

0.8

0.781

1933

-3.68

0.8

0.755

1932

-9.93

0.8

0.795

1931

-9.04

0.9

0.886

1930

-4.05

1.0

0.973

1929

1.17

Some facts from the above:

using July rates (July 1929 to July 2007) the inflation was 1,103%, or 12.03X (for an annual rate of 3.24%)

using average annual rates from 1929 to 2007 the inflation was 1,082%, or 11.82X

if the price of an ounce of gold was $28 in 1929, today it would be inflation-adjusted to approx. $336.

gold's peak was $850 in 1980. Since 1980 the inflation rate was approx. 240% (2.5X), inflation corrected price would be $2,140

from 1929 to today the price of gold has appreciated from $28 to $660, that is 2,157% (22.5X), for an annual rate of 4.07%.

Of course, these are nominal published rates, which are not considered by many to be real rates (they exclude energy and food) and who knows what the rates represented 50 years ago (different baskets).

If we add extra percentage points to each annual inflation rate, the inflation since 1929 would be: